Morning Movers: Ford Flies on Upgrade; Signet Jewelers Tumbles

The Dow Jones Industrial Average will try to come back from two days of losses today. In today's Morning Movers...

•...we look at economic data that suggests that the economy is not overheating; •...highlight an upgrade to Ford Motor (F) and Signet Jewelers' (SIG) disappointing earnings; •...and look at one contender for the future of banking in the View From Silicon Valley.

When Not Too Hot Is Just Right for Stocks

Nothing like a little bit of lukewarm economic data to give stocks a morning boost.

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While the producer price index rose 0.2% in February from January, a bit higher than the 0.1% forecast by economists, retail sales dropped 0.1% when they were expected to rise 0.3%. It was the third consecutive month of declines, though sales rose 0.2% if auto sales were excluded. And despite the drop, retail sales have increased 4% from a year ago. Still, a drop is a drop, and it comes as consumers should be seeing more money in their bank accounts due to tax reform.

Should we be worried? Andrew Hunter, U.S. economist at Capital Economic, doesn't think so. He notes that job growth is surging, consumer confidence remains at very high levels, and consumers should start putting those higher paychecks to work. "This all suggests that spending will pick up again before long." —Ben Levisohn

Morning Movers

Broadcom (AVGO is up 0.7% $262.99 after it formally gave up its bid for Qualcomm (QCOM) after the government forbid the deal but said it would continue the process of moving to the United States.

Century Aluminum (CENX) is up 3.8% to $22.41 after JPMorgan upgraded it to Overweight.

Commercial Metals (CMC) has fallen 2% to $24.85 after getting cut to Neutral from Buy at BofA Merrill Lynch.

Express (EXPR) is up 4% to $7.70 on its fourth-quarter earnings report. The apparel retailer said it earned 34 cents a share on revenue of $693.8 million. Analysts were looking for earnings of 32 cents a share on revenue of $686.8 million. Comparable sales fell 1% in the quarter. For the first quarter, Express expects a loss of four cents or a breakeven quarter, compared to the two cent per-share loss consensus estimate.

RH (RH) has gained 2.8% to $78.10 after getting raised to Outperform from Market Perform at Raymond James.

Signet Jewelers (SIG) is down 10.7% to $42.77 on its fourth-quarter earnings report. The jeweler reported poor holiday sales in January, despite a strong retail environment, and lowered its full-year forecast. The jeweler said it earned $4.28 a share, on revenue of $2.29 billion. Analysts were looking for earnings of $4.17 a share on revenue of $2.29 billion. Same-store sales slipped 5.2% in the quarter. For the full year, it sees earnings between $3.75 and $4.25 a share, compared to the $6.09 consensus.

Ultimate Software (ULTI) is down 1.1% to $246 after Wedbush downgraded it to Neutral. —Teresa Rivas

The View From Silicon Valley

Mobile-only bank Chime isn’t your parents’ or grandparents’ bank.

The San Francisco-based start-up is gaining 100,000 accounts a month – it’s at roughly 900,000 – at a time when most large banks are struggling to attract millennials. Like other tech companies such as Amazon.com (AMZN), rumored to be considering a foray into checking accounts, Chime sees an opportunity in financial services amid a shifting customer base and widespread dissatisfaction with big bank services.

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“The days of getting all your financial services from one bank brand are ending,” says Chime Chief Executive Officer Chris Britt. “Our customers tend to be younger, rely on their smartphones and hate big banks.”

Indeed, 57% of millennials said they would change their bank relationship for a better technology platform solution, according to Deloitte. One reason why: Americans pay $15 billion annually in overdraft fees alone.

Chime is targeting those in their late 20s and early 30s with a low-fee checking and savings account, a mobile app that allows for automated savings and real-time notifications, and a policy of no monthly fees, hidden fees or overdraft charges. It makes money through a 1.5% fee of Visa-related transactions by its customers.

“Wells Fargo (WFC) reported $1.246 billion of service charges on deposit accounts in its last quarter,” Britt says. “That’s great advertising for us.”

Chime has benefitted from word-of-mouth referrals from customers, often on social media platforms such as Instagram, says Britt. Many are defecting from monolithic banks who crave lower costs and a simplified experience, he says.

The trend toward tech-centric, mobile banks has already started in Europe, where relaxed regulations have led to so-called “challenger” banks such as N26 in Germany, Monzo in Italy and Revolut in the UK, says Britt. —Jon Swartz

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